Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

158401 January 28, 2008

PHILIPPINE PORTS AUTHORITY, petitioner, vs. WILLIAM GOTHONG & ABOITIZ (WG&A), INC., respondent. DECISION AUSTRIA-MARTINEZ, J.: This resolves the Petition for Review on Certiorari filed by the Philippine Ports Authority (petitioner) seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on October 24, 2002 and its Resolution dated May 15, 2003. The antecedent facts are accurately narrated by the CA as follows: Petitioner William Gothong & Aboitiz, Inc. (WG&A for brevity), is a duly organized domestic corporation engaged in the shipping industry. Respondent Philippine Ports Authority (PPA for brevity), upon the other hand, is a government-owned and controlled company created and existing by virtue of the provisions of P.D. No. 87 and mandated under its charter to operate and administer the country's sea port and port facilities. After the expiration of the lease contract of Veterans Shipping Corporation over the Marine Slip Way in the North Harbor on December 31, 2000, petitioner WG&A requested respondent PPA for it to be allowed to lease and operate the said facility. Thereafter, then President Estrada issued a memorandum dated December 18, 2000 addressed to the Secretary of the Department of Transportation and Communication (DOTC) and the General Manager of PPA, stating to the effect that in its meeting held on December 13, 2000, the Economic Coordinating Council (ECC) has approved the request of petitioner WG&A to lease the Marine Slip Way from January 1 to June 30, 2001 or until such time that respondent PPA turns over its operations to the winning bidder for the North Harbor Modernization Project. Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA containing the following terms: 1. The lease of the area shall take effect on January 1 to June 30, 2001 or until such time that PPA turns over its operation to the winning bidder for the North Harbor modernization; 2. You shall pay a monthly rental rate of P12.15 per square meter or an aggregate monthly rental amount of P886,950.00; 3. All structures/improvements introduced in the leased premises shall be turned over to PPA; 4. Water, electricity, telephone and other utility expenses shall be for the account of William, Gothong & Aboitiz, Inc.;

Shortly thereafter. In the said amended pleading. Thereafter. In response. petitioner WG&A amended its complaint for the first time. Real Estate tax/insurance and other government dues and charges shall be borne by WG&A. It likewise included. 2001. which if granted. petitioner also sought recovery of damages for breach of contract and attorney's fees. the respondent judge issued an Order denying the Admission of the Second Amended Complaint. Also. petitioner WG&A wrote PPA on November 27. the complaint was already captioned as one for Injunction with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction and damages and/or for Reformation of Contract. The complaint was still denominated as one for Injunction with prayer for TRO. This time. 2002. as its third cause of action. The admission of the second amended complaint met strong opposition from the respondent PPA. Petitioner filed a motion for reconsideration of the aforesaid order but the same was again denied in an order dated April 26. Meanwhile. Jr. illegally and prematurely terminated the lease contract. However. On November 28. The said contract was eventually conformed to and signed by the petitioner company. Said request was denied by the PPA via a letter dated November 29. It postulated that the reformation sought for by the petitioner constituted substantial amendment. On December 11. 2001 urging the latter to reconsider its decision to eject the former. believing that the said lease already expired on June 30. PPA surrendered possession of the Marine Slip Way in favor of the petitioner. respondent PPA subsequently sent a letter to petitioner WG&A dated November 12. 2001 and to turnover the improvements made therein pursuant to the terms and conditions agreed upon in the contract. it included as its fourth cause of action and additional relief in its prayer. petitioner filed a Motion to Admit Attached Second Amended Complaint. 2001 directing the latter to vacate the contested premises not later than November 30. Petitioner later moved for the reconsideration of the said Order on February 11. however. it should be deemed as entitled to be refunded of the value of the improvements it introduced in the leased property. 2001. 2002. in accordance with the stipulations made in the lease agreement. On March 22. It likewise prayed for the issuance of a temporary restraining order to arrest the evacuation. Following the first amendment in the petitioner's complaint. 2002. Petitioner claims that the PPA unjustly. petitioner WG&A commenced an Injunction suit before the Regional Trial Court of Manila. the TRO sought by the former was denied by the trial court by way of an order dated January 16. 2002. 2001. through its President/Chief Executive Officer Endika Aboitiz. 2002. 2 . the additional relief in its prayer. In its complaint. that should the petitioner be forced to vacate the said facility. respondent PPA submitted its answer on January 23. will substantially alter the latter's cause of action and theory of the case. the reformation of the contract as it failed to express or embody the true intent of the contracting parties.5. the petitioner incorporated statements to the effect that PPA is already estopped from denying that the correct period of lease is "until such time that the North Harbor Modernization Project has been bidded out to and operations turned over to the winning bidder. 2001.

however. and an opportunity to be heard. – after the case is set for hearing. the petition is DENIED for lack of merit.Herein respondent WG&A then filed a petition for certiorari with the CA seeking the nullification of the aforementioned RTC orders. to wit: SECTION 3. and after notice to the adverse party. Amendments by leave of court. Rule 10 of the 1997 Rules of Civil Procedure in Valenzuela v. the CA granted respondent's petition. "the amendment may (now) substantially alter the cause of action or defense. WHEREFORE. SO ORDERED. Petitioner moved for reconsideration but the same was denied per Resolution dated May 15. But such leave may be refused if it appears to the court that the motion was made with intent to delay. Court of Appeals. Rule 10 of the Rules of Court: Section 3. The Decision of the Court of Appeals promulgated on October 24."4 The application of the old Rules by the RTC almost five years after its amendment by the 1997 Rules of Civil Procedure patently constitutes grave abuse of discretion." This should only be true. instead of the provisions of the 1997 Rules of Civil Procedure. . Orders of the court upon the matters provided in this section shall be made upon motion filed in court. 2002 and its Resolution dated May 15. Section 3. 2003. The Court has emphasized the import of Section 3. Rule 10 of the 1997 Rules of Civil Procedure amended the former rule in such manner that the phrase "or that the cause of action or defense is substantially altered" was stricken-off and not retained in the new rules. Rule 10 of the 1997 Rules of Civil Procedure. The Court finds the petition without merit. 2002. 2003 are hereby AFFIRMED in toto.3 thus: Interestingly. speedy and inexpensive disposition of every action and proceeding. Rule 10 is that under the new rules. and prevent delay and equally promote the laudable objective of the rules which is to secure a "just. Amendments by leave of court. substantial amendments may be made only upon leave of court. Except as provided in the next preceding section. thereby setting aside the RTC orders and directing the RTC to admit respondent's second amended complaint pursuant to Section 3. 2002 denying the admission of respondent's second amended complaint. Hence. amending Section 3. The RTC applied the old Section 3. the amendments sought to be made shall serve the higher interests of substantial justice. and after notice to the adverse party. Orders of the court upon the matters provided in this section shall be made upon motion filed in court. substantial amendments may be made only upon leave of court. Rule 10. the present petition where the only issue raised is whether the CA erred in ruling that the RTC committed grave abuse of discretion when it denied the admission of the second amended complaint. In its Decision dated October 24. when despite a substantial change or alteration in the cause of action or defense. The clear import of such amendment in Section 3. The CA did not err in finding that the RTC committed grave abuse of discretion in issuing the Order dated March 22. But such leave may be refused if it appears to the court that the motion was made with intent to delay the action or that the cause of action or defense is substantially altered. and an opportunity to be heard.

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